© 2016 Kilpatrick TownsendFebruary 7, 2017

Kate Gaudry

Allisen Pawlenty-Altman

Timothy Jezek

David Beck

ACC Technology & IP Forum

IP 101 for Non-IP Counsel

• Issue Spotting a Product Launch

– Developing processes for identifying potential IP in a timely manner

– Monitoring business units for potential IP infringement

• Issue Spotting during Contract Preparation or Negotiation

– Licensing in or out

– Contracts (e.g., employment contracts, work-for-hire contracts)

• Considerations for Competitive Challenges

– Litigation, Post-Grant Proceedings (e.g., Post-Grant Review, Inter Partes Review)

– Policing & Enforcing

• Considerations for Mergers and Acquisitions

– Contributing to decisions as to whether to acquire a company and/or valuations

– Contributing to preparation for diligence

2

IP Issues Faced by Corporations

• Trade Secrets – Any secret formula, pattern, device, or

compilation of information used by the company that gives it an

advantage over the competitors and is not in public domain

• Patents – Confers right to exclude others from making, using,

manufacturing, or importing claimed invention. Claimed invention

must be patent-eligible, new and non-obvious

• Copyrights – Protects works of artistic expression in tangible form

(includes software)

• Trademark / Service Mark – Words, symbols, designs, colors &

sounds used to identify the source of one’s products or services to

consumers

• Domain Names – World Wide Web address for a domain 3

Product Launch – Consider These Types of IP

• Trade Secrets – Take steps to protect trade secret

– Term: No expiration

• Patents – File and prosecute patent application with patent office(s)

(e.g., USPTO).

– Term: Generally 20 years from date of filing

• Copyrights – Register a work with U.S. Copyright Office to secure

advantages corresponding to establishing validity, enforcement,

damages

– Term: Individuals: Life+70 yrs. Companies: Shorter of 95 yrs. from

publication or 120 yrs. from creation

• Trademark / Service Mark – Properly use mark “®” and “TM”. Register

mark with trademark office(s) (e.g., USPTO)

– Term: No expiration so long as used

• Domain Names – Purchase right to name from domain name registry

– Term: Must be renewed periodically 4

Product Launch – Potential IP Actions

Trade Secrets• Do we have internal systems in place to keep our trade secrets

secret?

– Mark all trade secrets as “Confidential”

– Restrict access to our trade secrets

– Track access to our trade secrets

• Are trade secrets being made accessible to the public during the

product launch?

– Software that could be decoded and reverse engineered?

– Formulas that could be deconstructed to determine ingredients?

– Materials that could be studied to learn production methods?

• If yes, could we take further steps to protect these secrets?

– Licenses to prohibit reverse engineering

– Patents filed to protect process that may become public anyway

– Non-Disclosure Agreements to third parties where possible 5

Trade Secrets - Product Launch Checklist

Patents• Is a full “right to practice” patent search desirable? Best done for:

– Major new products which require large investment

– Products entering a crowded market against litigious competitors

• How does the product differ from what exists? Are new features

sufficiently distinguishable and important to seek patent protection?

• Has there been a disclosure of any of the new features? If so, to

who, in what context and when? This may bar patent protection.

• Are you ready to begin full patent prosecution now? If it is desirable

to delay costs, delay a patent’s expiration or further develop an idea,

consider filing a high-quality provisional patent application instead of a

non-provisional application. If quick patent protection is a priority,

consider a Fast-Track (i.e., Track 1) filing.

6

Product Launch – Checklist

Patents• Consider a design patent when:

– The appearance of the product is new and important

– Competitors are likely to produce and sell “knock-offs”

• Can the product be marked as “Patent Pending”?

– Do patent claims cover our new product?

– Mark new products to maximize patent damages

7

Product Launch – Checklist

• Is system in place to control the use of open source software?

– Do we monitor what open source software goes into our products?

– Do we check and approve the open source software licenses?

– Do we have a system to ensure license compliance?

• Is it known whether the new product includes open source software?

• Is it known which open source software licenses are used and are they

compatible with our commercial license?

• Have steps been taken to comply with the open source software

licenses?

• Do our customer contracts forbid the use of open source software or

certain types of open source software?

8

Open Source - Product Launch Checklist

“Soft IP” Considerations• Is the new product branded? Does it have feature names?

Marketing taglines or slogans?

– Conduct trademark search

– Consider trademark registration

• Does the product have a logo?

– Conduct design trademark search

– Consider © protection

• If made by employee in scope of employment – owned

by company as “work made for hire”

• If made by outside contractor/vendor, get assignment

• Best to file © application within 90 days of release

9

Product Launch – Checklist

“Soft IP” Considerations• Does the product have a unique configuration?

– Is the configuration ornanmental or functional?

• If ornamental, consider design patent, trade dress and/or

copyright protection.

• Does the product have packaging?

- Review for “new” names, feature names, copyright-protectable

materials

- Review for proper IP marking – ® or TM for trademarks or © for

copyright

- Consider “plain” (non-branded) packaging if you’re launching a risky

new brand

10

Product Launch – Checklist

“Soft IP” Considerations

Did Marketing create print or video advertisements?

• Have licenses been secured for any non-original works (photos,

videos, music) to be used in marketing?

– If not, is it necessary?

– Don’t rely on “fair use” without checking with IP counsel

• Is marketing using another company’s products in the

advertisement?

– Check with IP counsel

11

Product Launch – Checklist

“Soft IP” Considerations

Does the product or marketing materials include work that

suitable for copyright protection?

– Is the proper copyright notice included?

– Who made it?

• Employee within scope of employment – company owns

© as “work made for hire”

• Outside vendor/contractor – get assignment

– Consider © filing (best to file within 90 days)

12

Product Launch – Checklist

“Soft IP” Considerations

• Have all domain names related to the launch been secured?

– Consider top level domains (.com, .org) and ccTLDs (.ca, .eu)

– Would the product/brand be suited to a gTLD? i.e - .BRAND

– Domain ownership ≠ trademark ownership

• Will the product have a web or social media presence?

– Before launch, review web pages and social media handles/pages:

- For “new” names, feature names, use of other party’s brands,

copyright protectable material, etc.

- To ensure proper IP usage and marking

13

Product Launch – Checklist

• Licensing

– In From Another Entity – Receiving limited rights of IP less than

ownership

– Out to Another Entity – Giving limited rights of IP less than ownership

– Cross-Licensing with Another Entity

– Open Source Licenses

– Implied Licensing – Provided to customers re IP corresponding to what

was sold to them

• Contracts

– Contracts for Sale – Contract defining an exchange of goods, services

or property for agreed upon value. May include sales of IP or sales

resulting in access to and/or implied licensing of IP or potential IP

– Work-for-Hire – Contract where employer is considered owner of

generated IP

– Employment Contracts – Contract for attributing rights and

responsibilities of an employer and employee. May include provisions

concerning IP ownership or obligations and/or non-competes. 14

Contract Preparation or Negotiation –Checklist of Contracts that May Involve IP

• Does the contract limit the conferred rights? Consider limitations on

time, uses, derivations, geographies.

• Does the contract provide an exclusive license?

• Might the contract provide an implied license to others (customers

of the other party)?

• Does the contract address rights corresponding to other (e.g.,

new) related IP that the licensor develops? E.g., continuation,

divisional or continuation-in-part applications?

• Have foreign rights been addressed?

• If the contract involves pending IP, is it clear to what degree each

party controls prosecution and/or filing decisions?

• Does the contract require notice provisions?

• Does the contract address what happens if IP is challenged or

invalidated?

15

IP Licenses & Contracts for Sale – Checklist

• Does the contract include an obligation-to-assign provision?

– Consider that the inventor may leave the company or complete the

hired work before a patent application is filed. Consider specifying

that IP is owned by company

• Have top-level personnel signed employment agreements?

– If not, consider whether an agreement should be made confirming

company ownership of IP

• Does the contract include a trade secret provision?

– How are trade-secret technologies identified?

• Does the contract include a non-compete provision?

– Are there limitations on the non-compete (that may increase its

enforceability and reduce objections)?

16

Work-for-Hire and Employment Contracts –Checklist

• Cease and Desist Letters – Can be used for patents or soft IP

• Litigation

– District Court

– International Trade Commission

• Post-Grant Proceedings

– Post-Grant Review (PGR)

– Inter Partes Review (IPR)

• Avoiding infringing others’ IP

– Freedom-to-Operate Searches

– Mark searches

• Note that company may be involved in litigation or post-grant

proceeding by choice or as a result of competitor’s action

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IP & Competition: Checklist of Options

• Post-Grant Proceedings

– Post-Grant Review (PGR)

• Can file against claims with effective filing date on or after

3/16/2013

• Must file within 9 months after patent grant

• Can challenge on any grounds of invalidity (101, 102, 103,

112)

• Total petitions received as of 10/31/2016: n = 481

– Inter Partes Review (IPR)

• Can file against any unexpired U.S. patent

• Must file after 9 months post-grant (and after termination of

any PGR)

• Can only challenge based on prior-art grounds (102, 103)

• Total petitions received as of 10/31/2016: n = 5292

18

IP & Competition: Checklist of Options

To Address Infringement of Your Company’s Rights

• Have you sent a Cease and Desist Letter? Cheapest option and

puts on notice (can increase damages, may result in settlement).

But could prompt Declaratory Judgment or Post-Grant Proceeding

• Do you have the money and stomach for litigation?

• Are you positioned to file targeted IP applications (e.g., by

having pending related patent applications)?

To Address Competitor’s IP

• How important is it to prospectively invalidate IP? What is the

probability that it would be asserted?

• If the IP is a patent, was it issued more than 9 months ago? If

so, post-grant reviews are off the table.

• On what grounds would you invalidate the IP? IPRs cannot be

used to challenge patent eligibility, enablement, other 112 issues19

Assertive Options: Checklist of Considerations

Preventive Options

• Do you want to perform searches prior to use? May be

expensive and put company on notice. May also unduly restrict

company. But may also facilitate design-arounds.

• If you know of problematic IP, is a license an option?

Defensive Options

• Is a settlement an option? Consider whether it sets a bad

precedent with particular entity. Consider cost of settlement in view

of likelihood of success defending position and cost of same.

• If another company sues you asserting patent infringement, is

a post-grant proceeding an option? Consider timing and

invalidation arguments.

• Do you have IP that you could assert against the other

company? Could you, and would you want to, buy IP for this

purpose?20

Defensive/Preventive Options: Checklist of Considerations

• Providing IP Advice for Potential Acquisitions by Company

• Preparing IP Data for Diligence (e.g., Investor Review or Potential

Acquisition of Company)

• Types of Assessment:

– Mapping to Business Priorities

– Scope Assessment

– Validity Analyses

– Assignment Review

– Protection Expiration Reviews

21

Mergers & Acquisitions

• How large is the IP portfolio of the company considered for acquisition?

Consider not only size but size of groups (e.g., patent families, related trademarks)

• What types of IP are in the IP portfolio? The value of any type of IP varies

depending on context, but trade secrets may be more vulnerable to devaluing than

other types.

• What is the status of the IP? Are patents granted or pending? Are copyrights

registered? Are trademarks registered? Granted patents and registered

copyrights/trademarks are of higher value.

– Assessments of prosecution history of patent applications and examiner data

can be used to help predict an outcome.

• Is the chain-of-title sound? IP built off of other IP owned by another company

should be a red flag. IP not assigned to a potential acquisition target should also be

a red flag. IP with liens are less desirable.

• Are inventors of the patents coming to the purchasing company after the

acquisition?

22

Mergers & Acquisition – Checklist

Patents• Review scope of claims.

• Extremely broad patents are more likely to be invalidated. Particularly true of

older software/business-method applications due to Alice Corp. v. CLS Bank

(2014).

• Review prosecution history to predict whether claims may be more limited than

they appear on their face.

• Review IDS filings. Patent applications with no IDS filings may be of higher risk of

being invalidated as a result of inequitable conduct for not identifying 1+ references

being material to a patentability decision.

• Determine expiration dates of patents. While it is generally 20 years from filing,

it is also affected by priority claims, delays attributed to the patent office, delays

attributed to the applicant and any extension afforded by various FDA approvals.

Patents with earlier expiration dates are of less value.

23

Mergers & Acquisition – Checklist

Patents

• Are the patents being challenged via litigation or post-grant proceeding or have

high probability of same? Each has a distributions of outcomes and is expensive.

But it means that someone cares about the patent.

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Mergers & Acquisition – Checklist

Trademarks

• Review of seller’s trademark files– Registrations, cease and desist letters, litigation, agreements

– Confirm proper maintenance of trademark records

• Review seller’s website, products, press releases, etc. – Proper trademark usage, marking

– Identify possible unregistered trademarks, slogans, etc.

– Protectable or infringing trade dress, marketing, etc.

• Trademark and litigation searches– Independent owner search for marks owned by seller

– Mark searches to identify 3Ps with closely similar marks (like

clearance)

– Undisclosed lawsuits involving seller’s trademarks, copyright, etc.

25

M & A: Checklist of Considerations

Copyrights

• Obtain and review all US copyright files owned by

seller

• Conduct independent owner search at

www.copyright.gov

• Obtain and review list of all relevant non-registered

works which have ever been offered for license, use

or sale by seller

• Obtain and review all copyright licenses involving

seller

• Obtain and evaluate information relating to all

copyright demand letters, lawsuits involving seller

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M & A: Checklist of Considerations

Domain Names, Websites and Social Media • Obtain and review registration documents for all domain names

owned by or licensed to seller

• Obtain and evaluate information relating to all demand letters,

lawsuits involving seller’s domain names and website content

• Obtain and review search of seller’s domain names for 3P

typosquatting

• Review all websites and social media accounts for possible IP

issues

27

M & A: Checklist of Considerations

Real-World

Scenarios

Incorporating

Discussed

Concepts

28

• Communicate with engineers and marketing. Public disclosures:

– Immediately prevent patent protection in most foreign countries

– Start the 1-year grace clock for securing patent protection in the U.S.

• Monitor for releases of new versions. A modification to an “old” thing can

be patentable (if it’s new, non-obvious and patent eligible)

• A non-disclosure agreement can (if properly drafted and used) prevent a

disclosure from being deemed “public”

• Provisional patent applications are a useful tool to prevent loss of rights in

view of an imminent disclosure. Provisional applications:

– Expire within one year. So claims need not be perfect and you have a year to

decide whether the invention is of sufficient value for a non-provisional.

– Are generally cheaper than filing a non-provisional application.

– Only “put a stake in the ground” so far as what is described. If the

provisional describes A+B, but an inventor discloses A+B+C or A+C and wants

to secure protection on that specifically, there will be some challenges (may

prevent foreign protection and disclosure would start one-year grace clock).29

New-Version Release Scenario: Important Takeaways

• A copyright is a legal right that protects an owner’s creative work

from being reproduced or otherwise used without that owner’s

permission.

– Exists from the moment of creation

– Protects a work fixed in a tangible medium (e.g. writing, recording)

– Registration beneficial, but not required, for copyright ownership

– But to bring a lawsuit, you need to register your copyright. File your

application within 90 days of release, or before infringement begins, for

stronger court relief.

• A creative work can be: marketing print or video; instructional manual; product

packaging/artwork; scientific paper

• But not: works not fixed in a “tangible medium” (i.e. spoken only); titles, names,

short phrases; ideas, methods, procedures, systems, processes; facts, statistics

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New-Version Release Scenario: Important Takeaways

• Eliminating risky names at the preliminary stage will not only save on

outside counsel fees, it can avoid headaches down the road, such as:

– Injunction (rare): prohibits sale and distribution of the product under the

infringing name = absence from market

– Reputational damage : bad press

– Monetary awards to party with prior rights

– Costs to start over: re-clear, re-brand, re-launch; and/or seizure and

destruction of materials

• Use this process to evaluate a name:

1. “Clearance” = Can we use it?

2. “Protection” = Can we own it?

3. “Enforcement” = Can we stop others?

• Weigh against:

– Significance of mark (to company, industry)

– Existing commitment to the name

– Whether will be used externally or only internally

– Detriment that it would be to change the name (both now and later)31

FixPix Scenario: Important Takeaways

• Domain Names are not necessarily trademarks – do not rely solely on domain

name registration to establish trademark or brand rights

• Domain Names are first come first served for registration, so file for domains

before the brand becomes public or discernable

• If Domain Name ownership is important, develop a strategy that includes top level

domains (.com, .org), ccTLDs (.ca, .co.uk) and likely domain name misspellings

• Domain Name vendors offer services that enable your company to file under

stealth (i.e. privacy protected or in the name of a shell company) so domain name

“squatters” cannot easily connect the domain name registration to your company’s

upcoming launch

• Domain Names can be incredibly valuable

– Think of www.nuts.com or www.wine.com32

FixPix Scenario: Important Takeaways

• US Patent Office: https://www.uspto.gov/patent

• Patent Assignment Search:

https://assignment.uspto.gov/

• US Trademark Office:

https://www.uspto.gov/trademark

• PTO Learning & Resources Page:

https://www.uspto.gov/learning-resources

• US Copyright Office: https://www.copyright.gov/

• Domain Tools WHOIS Lookup:

http://domaintools.com/

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Resources Page

• Implementing procedures to protect various types of IP is critical

to ensuring that IP is consistently identified and evaluated for

protection pursuit

• There are many different types of IP. Be sure to consider them all

and to communicate with people from various teams (e.g.,

engineers, content production, marketing, IT)

• Patent filings should be filed before any disclosure. Marking is

advantageous for trademarks. Registration is advantageous for

copyrights.

• Contracts should define what obligations exist re IP rights

• There are many possibilities re potential licensing and/or

acquisition arrangements. Carefully review the other side's IP and

consider objectives before committing to a strategy

• Re competitors, potential strategies range from working together

to an all-out IP war. Consider costs and potential outcomes (e.g.,

in terms of statistics of proceeding and particulars of an IP asset)

before initiating, settling or proceeding. 34

Conclusions